Solving the Riddle of Actual vs. Paid Miles
“Tell me again why we are driving 1,150 miles and only getting paid for 1,000?” asked “Rick," the new “rating” manager. His team is responsible for comparing and rectifying the contracted rates and mileage to the actual miles operated, the amount invoiced, and what the customer paid. Unfortunately, he discovered that while the operation considered itself a lean machine, the reality was that they were experiencing losses at every level:
- The contract mileage was well short of the practical miles.
- The actual miles driven were well over the paid miles.
- The customers regularly paid short on invoiced miles.
This is not an uncommon situation. What is unique is that Rick discovered the discrepancy and dug deeper to rectify the issue. How? GPS data from his vehicle tracking solution. That data and its analysis are essential to understanding business reality compared to the business plan.
Vehicle trackers are one of the best, lowest-cost methods for collecting and pulling apart data to make it meaningful. They provide precise time, date, speed, and engine status using GPS and engine data. In addition, the best vehicle tracking systems offer insightful reporting to assist you in improving operations and, oddly enough, complying with the FMCSA's Safety Management Controls.
Back to Rick’s investigation. Three culprits were discovered: determining mileage, driver non-compliance with planned routes, and speeding.
Mileage Determination
Charging mileage from Point A to Point B is complex. Several calculators are used to determine distance, with each providing a different result. In fact, from one version to the next, the same calculator can return different results. Variance is often due to "switches" in the calculator. The switches may include the shortest, practical, interstates, tolls, and even ferry routes. If the carrier isn't using the same calculator and version with the same switch options, the route mileage will not match.
Route Planning
Rick's drivers weren't adhering to established routes as directed. He found drivers who were making unplanned, unapproved stops. Not only did this take them out of route, it also exposed their loads to unnecessary theft, risk, and fines. Some drivers said they “knew a faster route,” but further investigation determined these unsanctioned routes were actually more miles. A route that may have saved 30 minutes literally took a driver 100 miles out of the company-calculated route! (A 100-vehicle fleet could save $325,000.00 per year by using GPS data to reduce their out-of-route miles from 10% to 5%.)1
Speed
Not only can reducing speeds by five to ten miles per hour improve fuel economy by seven to 14 percent2, but it also prevents violations and accidents. Rick’s drivers were sometimes conflicted, asking, “Do you want me not to speed (i.e., be safe) or make my deliveries on time.” His answer was a resounding "Yes!"
Rick used vehicle tracking data to educate drivers on where and when they were speeding and help them understand that speed is just one part of the equation, along with sticking to the planned route. The reality is that on a 100-mile trip, the difference between a 50-mph average and a 60-mph average is just 20 minutes.
No Need to Guess
Using data from their vehicle tracking system, Rick’s team was able to meet customer demand with rates that corresponded to the business need. In addition, their vehicle tracking system helped them adhere to and monitor established quantifiable standards.
Consider investigating vehicle tracking solutions, including the J. J. Keller® Encompass Vehicle Tracking System, as a powerful way to monitor operations, costs, and compliance.
1 Based on 2,000 miles per week average per vehicle, at eight mpg fuel efficiency, at $5.00 per gallon.
2United States Department of Energy, Alternative Fuels Data Center, Techniques for Drivers to Conserve Fuel, https://afdc.energy.gov/conserve/behavior_techniques.html
About J. J. Keller & Associates, Inc.
Since we began as a family-owned company in 1953, our purpose at J. J. Keller & Associates, Inc. has been to protect people and the businesses they run. Today, serving 500,000+ companies across North America, our associates are proud to make a larger impact than ever. Transportation, construction and industrial organizations of all sizes rely on our expert insights to create safe work environments and simplify complex government regulations. They trust our diversified portfolio of solutions – cloud-based management tools, consulting, professional services, training, forms, PPE and safety supplies – to safeguard workers, reduce risk and build operational confidence. www.jjkeller.com
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